Comm101

In response to Jaeh Song’s blog on Bill Gates. This shouldn’t be an issue, the man is doing everything he- can manage to do to help give back to this world. It is not a marketing move. The malaria shots do not come with windows logos on them. It’s social activism and should be encouraged in corporate culture because we live in a the sort of world in which ‘male baldness research gets more funding than malaria.” He doesn’t need to make his donations anonymous because the fact that he does it convinces others who are in a similar position of ridiculous wealth to do the same. Over his lifetime he has donated over $30 billion in funding as aid, and  research and development.

An Angel?…Or a Devil?

http://www.wired.com/gadgets/mac/commentary/cultofmac/2006/01/70072

http://www.wired.co.uk/news/archive/2013-03/14/bill-gates-capitalism

http://www.moneyhowmuch.com/2010/05/if-you-had-bill-gates-money-how-much-of.html

Now I know game theory isn’t taught in our comm 101 course, nonetheless, it is a topic which intrigues me and one which I have decided to do research upon. A game is a situation in which decision makers rely on the decisions of the other players to make an optimum decision. It’s the study of how strategic decisions are made with the anticipation of the decisions made by other decision makers.

This is fascinating podcast which shows how Jane Austen actually wrote about game theory strategies and situations well before they were invented. Which is strange given that it was 100s of years before the study was invented. In the novel, the manner in which she manipulates the marriage while forecasting and planning for all the possible actions of the other parties involved is similar to game theory. It shows that game theory really is about thinking, and shouldn’t solely be restricted to grey beards with a wizard-like affinity for maths. It’s a great listen, and I would definitely recommend it.

http://freakonomics.com/2013/07/04/jane-austen-game-theorist-a-new-freakonomics-radio-podcast/

– Stephen J. Dubner

07/04/13

Recently Facebook had it’s offer to buy snapchat for $3 billion rejected. To me that is an astounding figure. I wondered how a company like snapchat, or Instagram could be valued at such prices without producing any revenue. The apps are free to download, and there is no in-built advertising. After reading up on business valuation I understood that apps like these are no different from something tangible- like a goldmine. Investors invest under the assumption that there is gold under the mountain you’re building your mine on. They are placing more value on the potential of the mine to produce and less on the mine itself. It is the same with Facebook and Instagram, because Facebook could see that it could use Instagram’s massive user base and merge it with it’s services and thus open up more revenue streams.

http://en.wikipedia.org/wiki/Business_valuation

http://www.forbes.com/sites/greatspeculations/2013/10/21/how-instagrams-monetization-can-help-facebook/

I eat the same insipid food at the cafeteria everyday, and my life would be dull if it weren’t for sriracha sauce. I decided to do some more research on sriracha sauce, and came across the inspiring story of Mr. David Tran. Mr. Tran is the founder of Huy Fong Foods, and the inventor of sriracha sauce.

Forced to flee his native Vietnam because of the war, he relocated himself to LA. Unfortunately for him, he couldn’t get a job. So he used his free time making buckets of hot sauce. At first the sauce was too hot to handle, and he was advised to sweeten it. However he refused to change his product and responded by saying “We don’t make mayonnaise here.” In addition to his philosophy on the spiciness of sauce he believed sauce should be affordable. Even after two decades of operation a 28oz bottle is still priced at around $4. “My american dream wasn’t to become a billionaire. We started this because we like fresh, spicy chili sauce.”

Huy Fong Food’s revenue grows by 20% every year and is a reflection of the steady principles of it’s founder.

http://articles.latimes.com/2013/apr/12/business/la-fi-himi-tran-20130414

Yahoo recently sacked around 600 employees after concluding from their performance evaluation methods that the sacked employees were under performers who were bringing the company down. Yahoo’s metric was a bell curve which measures productivity of employees as assessed by the management. A lower standard deviation is representative of a homogenized organization of equally productive workers. Companies seek to do this by firing the employees on the lower end of the graph. However, research has shown that this isn’t always a correct approach as it brings down morale of the other workers. It works as a disincentive to employees who are currently highly productive; because as more and more workers depart; employees who previously used to be termed high-performers are now relative to the other employees(other high-performers) are simply average. By categorizing those who would otherwise be overachievers as average, employers are alienating their best workers. Such high pressure has historically been correlated with low employee satisfaction, and it isn’t an ideal situation for Yahoo, especially when a fellow software giant, Microsoft, has just recently completely abolished this system in place of one that rewards high performance and team work.

http://www.infoq.com/news/2013/11/stack-ranking-microsoft-yahoo

While I very much enjoyed the swot analysis on snapchat in xin jiang’s blog, I do not necessarily understand why she is so shocked that he rejected this offer of $3 billion. Snapchat, Instagram and the like have been fortunate to be caught in the social bubble so they will not be valued at exactly what they are worth but that’s always a risk in business. If anything, I’d give credit to Evan Spiegel for resisting the temptation to sell because of his belief and vision in his product. If facebook were to buy it, Snapchat’s  greatest and apparently only strength – privacy, as explained by Xin would no longer exist. Thus rendering the company useless.

http://www.bbc.co.uk/news/business-24926212

Ambitious Snapchat

I read an article yesterday on how a doctor in Maine managed to cut his cost in half by refusing health insurance. By posting flat rates on his website, and refusing any private or government sponsored insurance he was able to provide the same service to his clients at a drastically lower cost. Some clients didn’t particularly like this idea because then they’d have to fill out paperwork for reimbursement, but the doctor is optimistic and hopes to attract other clientele. To me, this idea was eye opening because it showed me different ways in which a business could cut costs.

Why then, do other doctors not follow a similar approach?

Well because in other countries it’s not how the healthcare system works. For example in the UK healthcare is publicly funded (NHS) and a very small percentage of the population is covered by private companies. In such a system our doctor’s plan wouldn’t quite work because if every British residence has insurance cover they are going to want to make use of it when they need it. The price wouldn’t be as important to the customer as the hassle free service offered by their insurance.

http://en.wikipedia.org/wiki/Health_insurance#United_Kingdom

http://www.upi.com/blog/2013/05/29/Maine-doctor-cuts-prices-in-half-by-refusing-health-insurance/3571369847964/

The first thing I learned while researching credit cards was something called  the Credit Score . It turns out that maintaining a high credit score is imperative, as it will save you a lot of money. Any loan is technically credit but amongst all loans credit cards are the most important to understand given how frequently they are used in daily life. Learning how to manage them makes them worth having.

Pay off your bills regularly. 35% of credit score is represented by your debt payment history. A tardy payment will drop your score and increase your APR.  APR= ~ >14% Annual Percentage Rate. There is also a late payment fee.  Keep your cards active for a lengthy period of time, this shows that you are reliable. Once you start paying off your bills regularly, request for a credit increase. This will improve your credit utilization rate. A lower  rate is preferred since lenders want to see that you will not default on loans. Avoid closing accounts especially before making a big purchase. The credit score is partially calculated using credit utilization rate and a lower credit utilization rate implies a higher score which in turn leads to lower interest charged on future credit.

http://www.investopedia.com/terms/c/credit_score.asp

http://www.investopedia.com/university/credit-cards/

How should  businesses combat internet piracy? Piracy is very hard to defend on moral grounds, because it’s theft (copyright infringement, intellectual property, illegal distribution, etc.) . If consumers are given easy access to a quality, inexpensive alternative to what is currently offered on the market what’s to stop them from taking it?  Why don’t businesses think of an innovative method in which to extract revenue from customers by offering them a better service, at a lower cost?  A method which strives to create value for the customer.

There are already several companies following this approach. Take for example steam; steam offers heavily discounted pc games that are instantly downloaded in a ready to play format without hassle. Netflix follows a similar strategy, while piracy levels in Norway has dipped by 80% once people were given access to legitimate alternatives to piracy.

Piracy is unethical and unsustainable. Eventually there will cease to be an incentive for providers of original content if there is insufficient compensation. However people are less likely to steal if given a good alternative, and I think that’s what big businesses should look to do, in order to stay competitive.

Earlier this year the government announced that it would be auctioning off a vacant wireless spectrum. This was seen by Verizon as an opportunity to gain a foothold and expose a big market.

A move that threatened the stranglehold Bell, Telus and Rogers have on the market , and one that led them to actively and successfully oppose Verizon’s expansion. It is important to note that customer satisfaction with these companies is low given the expensive contracts and sub-par service on offer. However consumers have little choice as other privately owned startups are too small to compete with their larger counterparts. This gives the big three a staggering 90% of the market share.  

It’s unfair to allow firms to monopolize the market. The spectrum is owned by the public and therefore should be sold by the government keeping the public’s best interests in mind. Ie: Auctioned off at the highest price (it will be added to the government budget), with the aim of increasing competition.

This is unethical behaviour as instead of trying to beat the competition through innovation these companies are simply driving them out and thus placing taxpayers at a disadvantageous position.  

Related reading and citations-

http://goo.gl/inj4Aq

http://goo.gl/8ajJgi

http://goo.gl/0MQZcy